Future of the Taiwanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Future of the Taiwanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022

Summary

The Future of the Taiwanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022, published by Strategic Defence Intelligence, provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

Synopsis

This report offers detailed analysis of the Taiwanese defense industry with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

In particular, it provides an in-depth analysis of the following -
- The Taiwanese defense industry market size and drivers: detailed analysis of the Taiwanese defense industry during 2018-2022, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the countrys expenditure and modernization patterns
- Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country
- Porters Five Force analysis of the Taiwanese defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
- Import and Export Dynamics: analysis of prevalent trends in the countrys imports and exports over the last five years
- Market opportunities: details of the top five defense investment opportunities over the next 10 years
- Competitive landscape and strategic insights: analysis of the competitive landscape of the Taiwanese defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis

Scope

- Taiwans defense budget stands at US$10.2 billion in 2017, and the country is expected to cumulatively spend US$57.1 billion on its military over the forecast period.The main factors driving this growth are the rapid modernization of the countrys armed forces in recent years and the Peoples Republic of Chinas (PRC) assertiveness with regards to territorial claims.
- During 2013-2017, an average of 17.9% of the countrys total defense budget was allocated to capital expenditure; while an average of 82.1% was reserved for revenue expenditure. This is primarily due to Taiwans future modernization programs. For instance, in 2016, the Taiwanese Government announced future modernization plans in order to develop a strong defense industry. With the government planning to reduce the countrys armed forces from 215,000 to 190,000 by 2019, personnel costs are likely to reduce, resulting in a decline in revenue expenditure.
- The MoD is expected to invest in corvettes, misisle defense systems, diesel-electric submariens and mulri-role aircraft MRO.

Reasons to buy

- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Taiwanese defense industry market trends for the coming five years
- The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
- Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
- A deep qualitative analysis of the Taiwanese defense industry covering sections including demand drivers, Porters Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts

1. Introduction 7
1.1. What is this Report About? 7
1.2. Definitions 7
1.3. Summary Methodology 9
1.4. About Strategic Defence Intelligence 11
2. Executive Summary 12
3. Market Attractiveness and Emerging Opportunities 13
3.1. Current Market Scenario 14
3.1.1. Primary Threat Perception 14
3.1.2. Military Doctrine & Strategy 15
3.1.3. Military Fleet Size 17
3.1.4. Procurement Programs 22
3.1.5. Social, Political and Economic Environment & Support for Defense Projects 23
3.1.6. Political and Strategic Alliances 24
3.2. Defense Market Size Historical and Forecast 25
3.2.1. Taiwanese defense budget to grow at an estimated CAGR of 2.90% during 2017-2022 25
3.2.2. Issue of One China anticipated to drive military expenditure 27
3.2.3. Defense budget as a percentage of GDP will remain at an average of 1.8% over the forecast period 28
3.3. Analysis of Defense Budget Allocation 30
3.3.1. Share of capital expenditure is expected to increase during the forecast period 30
3.3.2. Capital expenditure is anticipated to record a CAGR of 3.25% during the forecast period 32
3.3.3. Taiwans per capita defense expenditure is expected to increase during the forecast period 34
3.4. Homeland Security Market Size and Forecast 36
3.4.1. The homeland security market in Taiwan is expected to grow at a CAGR of 1.38% during the forecast period 36
3.4.2. Human trafficking to drive homeland security expenditure 38
3.4.3. Taiwan falls under Some risk category in the terrorism index 39
3.4.4. Taiwan faces very low threat from terrorist organizations 40
3.4.5. Taiwan has a terrorism index score of 0.1 42
3.5. Benchmarking with Key Global Markets 43
3.5.1. Taiwanese defense expenditure expected to remain low compared to leading spenders 43
3.5.2. Taiwan will continue to remain as a small contributor in the global arms market 45
3.5.3. Defense budget as a percentage of GDP is expected to remain low over the forecast period 46
3.6. Market Opportunities: Key Trends and Drivers 47
3.6.1. Multirole Aircraft MRO 47
3.6.2. Dieselelectric Submarine 48
3.6.3. Missile Defense Systems 49
3.6.4. Corvettes 50
4. Defense Procurement Market Dynamics 51
4.1. Import Market Dynamics 52
4.1.1. Defense imports increased during the period 20122016 52
4.1.2. The US, Germany, and Italy are the major defense equipment suppliers for Taiwan 53
4.1.3. Aircraft, Missiles, and Air defense systems accounted for a total share 89.9% in Taiwanese defense imports 54
4.2. Export Market Dynamics 55
4.2.1. Taiwan defense exports was very low during 20122016 56
4.2.2. Central American countries are the major prospects for Taiwanese defense exports 57
5. Industry Dynamics 58
5.1. Five Forces Analysis 58
5.1.1. Bargaining power of supplier: High 59
5.1.2. Bargaining power of buyer: Medium 59
5.1.3. Barrier to entry: High 59
5.1.4. Intensity of rivalry: Low 60
5.1.5. Threat of substitution: Low 60
6. Market Entry Strategy 61
6.1. Market Regulation 61
6.1.1. The government encourages offsets to develop the domestic defense industrial base 61
6.2. Market Entry Route 62
6.2.1. Budgeting process 62
6.2.2. Procurement Policy and Process 63
6.2.3. Foreign equipment manufacturers enter the market through direct commercial sales 64
6.2.4. Foreign military sales is the viable market entry route for foreign defense companies 64
6.2.5. Biennial defense exhibition provides an attractive entry route 64
6.3. Key Challenges 66
6.3.1. Corruption and lack of transparency are the factors which hinders the growth of the Taiwanese defense industry 66
6.3.2. Delay of procurement programs will lead to cost overruns 66
6.3.3. Lack of sales agents and stringent regulations restrict domestic defense industry growth 66
7. Competitive Landscape and Strategic Insights 67
7.1. Competitive Landscape Overview 67
7.2. Key Domestic Companies 68
7.2.1. Aerospace Industrial Development Corporation (AIDC): overview 68
7.2.2. Aerospace Industrial Development Corporation (AIDC): products 68
7.2.3. Aerospace Industrial Development Corporation (AIDC): recent announcements and strategic initiatives 68
7.2.4. Aerospace Industrial Development Corporation (AIDC): alliances 69
7.2.5. Aerospace Industrial Development Corporation (AIDC): recent contract awards 69
7.2.6. Chung-Shan Institute of Science and Technology (CSIST): overview 70
7.2.7. Chung-Shan Institute of Science and Technology (CSIST): products 70
7.2.8. Chung-Shan Institute of Science and Technology (CSIST): recent announcements and strategic initiatives 71
7.2.9. Chung-Shan Institute of Science and Technology (CSIST): alliances 71
7.2.10. China Shipbuilding Corporation (CSBC), Taiwan: overview 72
7.2.11. China Shipbuilding Corporation (CSBC), Taiwan: products 72
7.2.12. China Shipbuilding Corporation (CSBC), Taiwan: alliances 72
7.2.13. The Combined Service Forces (CSF): overview 73
7.2.14. The Combined Service Forces (CSF): products 73
7.2.15. The Combined Service Forces (CSF): alliances 73
8. Business Environment and Country Risk 74
8.1. Economic Performance 74
8.1.1. GDP per capita at constant prices (US$) 74
8.1.2. GDP at current prices (US$) 75
8.1.3. Exports of goods and services (NT$ Bn) 76
8.1.4. Imports of goods and services (NT$ Bn) 77
8.1.5. LCU per US$ (period average) 78
8.1.6. Goods exports as a percentage of GDP 79
8.1.7. Goods imports as a percentage of GDP 80
8.1.8. Services imports as a percentage of GDP 81
8.1.9. Services exports as a percentage of GDP 82
8.1.10. Net Foreign Direct Investment as % of GDP 83
9. Appendix 84
9.1. About SDI 84
9.2. Disclaimer 84

List Of Tables


Table 1: Taiwan (Republic of China) Ground Forces Strength 17
Table 2: Taiwan (Republic of China) Air Force Strength 19
Table 3: Taiwan (Republic of China) Navy Strength 20
Table 4: Taiwan - Ongoing Development and Procurement Programs 22
Table 5: Taiwan - Future Procurement Programs 22
Table 6: Taiwanese Defense Expenditure (NT$ billion& US$ billion), 2013-2022 25
Table 7: Taiwanese GDP Growth and Defense Expenditure as Percentage of GDP Growth, 2013-2022 28
Table 8: Taiwanese Defense Budget Split Between Capital and Revenue Expenditure (%), 2013-2022 30
Table 9: Taiwanese Defense Capital Expenditure (NT$ Billion & US$ Billion), 2013-2022 32
Table 10: Taiwanese Per Capita Defense Expenditure (US$), 2013-2022 34
Table 11: Taiwanese Homeland Security Expenditure (NT$ billion & US$ billion), 2013-2022 36
Table 12: Terrorism Index, 2017 40
Table 13:Benchmarking with Key Markets - 2013-2017 vs. 2018-2022 43
Table 14: Defense Offset Regulations in Taiwan 61
Table 15: Taiwan Budget Formation Timetable 62
Table 16: Competitive Landscape of the Taiwan Defense Industry 67
Table 17: Aerospace Industrial Development Corporation (AIDC) - Product Focus 68
Table 18: Aerospace Industrial Development Corporation (AIDC) - Alliances 69
Table 19: Taiwan Aerospace Industrial Development Corporation (AIDC) - Recent Contract Wins 69
Table 20: Chung-Shan Institute of Science and Technology (CSIST) - Product Focus 70
Table 21: Chung-Shan Institute of Science and Technology (CSIST) - Alliances 71
Table 22: China Shipbuilding Corporation (CSBC) - Product Focus 72
Table 23: China Shipbuilding Corporation (CSBC), Taiwan Alliances 72
Table 24: The Combined Service Forces (CSF) - Product Focus 73
Table 25: The Combined Service Forces (CSF) - Alliances 73

List Of Figures


Figure 1: Taiwanese Defense Expenditure (NT$ Billion), 2013-2022 26
Figure 2: Taiwanese Defense Expenditure (US$ Billion), 2013-2022 26
Figure 3: Taiwan GDP Growth and Defense Expenditure as Percentage of GDP Growth,2013-2022 29
Figure 4: Taiwanese Defense Budget Split Between Capital and Revenue Expenditure (%),2013-2022 31
Figure 5: Taiwanese Defense Capital Expenditure (NT$ Billion), 2013-2022 33
Figure 6: Taiwanese Defense Capital Expenditure (US$ Billion), 2013-2022 33
Figure 7: Taiwanese Per Capita Defense Expenditure (US$), 2013-2022 35
Figure 8: Taiwanese Homeland Security Expenditure (NT$ Billion), 2013-2022 37
Figure 9: Taiwanese Homeland Security Expenditure (US$ Billion), 2013-2022 37
Figure 10: Terrorism Heat Map, 2017 39
Figure 11: Terrorism Index, 2017 42
Figure 12: Benchmarking with Key Markets, 2013-2017 vs. 2018-2022 44
Figure 13: Defense Expenditure of the Worlds Largest Military Spenders (US$ billion),2017 and 2022 45
Figure 14: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2017 46
Figure 15: Multirole Aircraft MRO Market Size (US$ Million), 2017-2027 47
Figure 16: Dieselelectric Submarine Market Size (US$ Million), 2017-2027 48
Figure 17: Missile Defense Systems Market Size (US$ Million), 2017-2023 49
Figure 18: Corvettes Market Size (US$ Million), 2017-2027 50
Figure 19: Taiwan Defense Import Trend (US$ Million), 2012-2016 (TIV values*) 52
Figure 20: Taiwanese Defense Imports by Country (%), 2012-2016 53
Figure 21: Taiwanese Defense Imports by Category (%), 2012-2016 54
Figure 22: Taiwanese Defense Export Trend (US$ Million), 2012-2016 (TIV values) 56
Figure 23: Taiwan Defense Exports by Country (%), 2012-2016 57
Figure 24: Industry Dynamics Porters Five Forces Analysis 58
Figure 25: Taiwans GDP Per Capita at Constant Prices (US$), 2015-2025 74
Figure 26: Taiwans GDP at Current Prices (US$ Billion), 2015-2025 75
Figure 27: Exports of goods and services (NT$ Million), 2005-2014 76
Figure 28: Imports of goods and services (NT$ Billion), 2005-2014 77
Figure 29: Taiwans NT$ per US$, 2015-2024 78
Figure 30: Taiwan Goods exports as a % of GDP (%), 2005-2014 79
Figure 31: Taiwan Goods imports as a % of GDP (%), 2005-2014 80
Figure 32: Taiwan Services imports as a % of GDP (%), 2005-2014 81
Figure 33: Taiwan Services exports as a % of GDP (%), 2005-2014 82
Figure 34: Taiwan Net Foreign Direct Investment as % of GDP 2005-2012 83

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